Statement of Accounts 2011/2012 - Blackburn with Darwen Borough ...

Local Government Pension Scheme history
31 March
2012
NOTES TO THE FINANCIAL STATEMENTS
31 March
2011
31 March
2010
31 March
2009
31 March
2008
£000 £000 £000 £000 £000
Present value of liabilities
Local Government Pension ( 503,208 ) ( 460,779 ) ( 491,527 ) ( 342,200 ) ( 404,643 )
Scheme
Discretionary Benefits ( 7,120 ) ( 7,219 ) ( 8,620 ) ( 7,337 ) ( 8,732 )
Fair value of assets in the
Local Government Pension
Scheme
327,618 322,669 304,869 225,016 278,890
Deficit in the scheme ( 182,710 ) ( 145,329 ) ( 195,278 ) ( 124,521 ) ( 134,485 )
Local Government Pension
Scheme ( 175,590 ) ( 138,110 ) ( 186,658 ) ( 117,184 ) ( 125,753 )
Discretionary Benefits ( 7,120 ) ( 7,219 ) ( 8,620 ) ( 7,337 ) ( 8,732 )
Total ( 182,710 ) ( 145,329 ) ( 195,278 ) ( 124,521 ) ( 134,485 )
The liabilities show the underlying commitments that the Council has in the long-run to pay post employment
(retirement) benefits. The total liability of £510M has a substantial impact on the net worth of the Council as
recorded in the Balance Sheet, resulting in a negative overall balance of £183M. However, statutory
arrangements for funding the deficit mean that the financial position of the Council remains healthy:
• the deficit on the local government scheme will be made good by increased contributions over the
remaining working life of employees (i.e. before payments fall due), as assessed by the scheme actuary.
• finance is only required to be raised to cover discretionary benefits when the pensions are actually paid.
The total contributions expected to be made to the Local Government Pension Scheme by the Council in the year
commencing 1 April 2012 is £10,500,000. Expected contributions for the Discretionary Benefits Scheme in the
year commencing 1 April 2012 are £638,000.
Basis for estimating assets and liabilities
Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the
pensions that will be payable in future years, dependent on assumptions about mortality rates, salary levels etc.
Both the Local Government Pension Scheme and Discretionary Benefits liabilities have been assessed by Mercer
Human Resources Consulting Limited, an independent firm of actuaries, estimates for the Lancashire County
Fund being based on the latest full valuation of the scheme as at 31 March 2010.
The principal assumptions used by the actuary have been:
Long-term expected rate of return on
assets in the scheme:
Funded liabilities: Local
Government Pension
Scheme
Equity investments 7.0% 7.5%
Government Bonds 3.1% 4.4%
Other Bonds 4.1% 5.1%
Property 6.0% 6.5%
Cash/Liquidity 0.5% 0.5%
Other 7.0% 7.5%
Overall expected return 5.69% 6.54%
- - 71 - -
Unfunded liabilities:
Discretionary Benefits
2011/12 2010/11 2011/12 2010/11
£000 £000 £000 £000